Do I Really Need a Fideicomiso to Buy Real Estate in Mexico?

So why do I need a fideicomiso, when this nice real estate agent told me there are other ways to own property in Mexico?
Well my first answer to that is another question. Why would you consider anything but the safe, sane and legal way to own your Mexican dream property?

First let me explain, the fideicomiso or ” bank trust” is an instrument used in Mexico to hold assets in a trust and administered by the bank, for safety and security and accountability for that asset.

The Mexican government changed their constitution in 1973 to make it safe for you to own property in Mexico. The fideicomiso was adapted for use by the foreign buyer to hold their Mexican property.

Not all areas of Mexico require fideicomisos for cash transactions. But in areas 31 miles from a coastline or 61 miles from an international border, foreigners can only own their personal residence or vacation property in a fideicomiso. This is called the Restricted Zone. All of the Baja Peninsula is in the restricted zone.

Take note: The Mexican government CHANGED their constitution and adopted the fideicomiso so the foreign investor (you) would be 100% protected when buying your Mexican dream home. It is SAFE to buy property in Mexico. If you do it right!

If you are getting a mortgage for your Mexican dream home, then no matter where your property is located in Mexico you will need a guarantee fideicomiso that names the lender, and gives them the right to foreclose.
The fideicomiso costs between $400 and $600 depending on the bank. There is also an annual renewal fee of the same amount of money. This is a small fee to ensure that your property is yours, legally and safely.
And the fideicomiso gives you the same rights over the property as if you had a fee simple title:

1. You can mortgage it
2. You can rent it
3. You can bequeath it
4. You can sell it
5. You can make improvements to it

The fideicomiso is valid for 50 years and you or your heirs can renew it time and again in 50 year chunks forever. When you die, just like in a living trust in the US, your heirs receive the keys and ownership of the property, there is no probate.

There are always people trying to circumvent the system, and there seems to be no earthly reason why you would do this. To save a few thousand dollars upfront when you purchase? This can come back to bite you later and cost you hundreds of thousands or the loss of the property.

As you have read in my book, or will find out if you haven’t read it, if you cannot get a fideicomiso on the property you are looking at, stop looking at it, and move on to another property.
Repeat after me: there is no legal, safe way to own a residential property in the restricted zones of Mexico other than with a fideicomiso! Make this your mantra.

In case you are still not convinced go to these links and read about Punta Banda:
Punta Banda Story

Punta Banda ll

I go into a lot of detail about Punta Banda in my book.

There are many gorgeous beach communities throughout Mexico, and most of them are safe for you to buy. But even in the safe areas, there could be properties that cannot be put into a fideicomiso…walk away. I know it may hurt, but there are other homes or lots that you can buy with a fideicomiso.

My manta: do it right the first time, pay a little now, or pay BIG TIME later.

Watch for updated posts every Monday afternoon,.
And hey, leave me a comment!

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Date: Tuesday, 17. November 2009 13:58
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